Global Economy Sends Mixed Signals Amid Weaker Data Releases
The global economy is sending mixed signals as markets remain optimistic despite weaker data releases. The Bank of Japan delivered its first rate hike in 20 years, increasing its policy rate to 1.25%, a 31-year high.
Japan's inflation rate held steady at 1.9% in August, while core inflation eased to 1.7%. This is seen as an achievement for the country, which has managed to replicate this result alongside other Asian economies.
In China, foreign direct investment (FDI) fell 5.3% on a year-to-date basis, with tiny incremental flows in August. The Bank of Japan's rate hike was expected to strengthen the yen, and it did so after a 'rate check' in currency markets.
The US industrial production stalled in August from July, while the Conference Board leading indicator edged lower. In Europe, ECB inflation expectations survey shows levels at 3.0% (median) and 5.0% (average), little-changed from June and July surveys.